Although bitcoin prices have declined since last quarter, Hut 8 showed improving metrics in its third quarter earnings report.
Hut 8 Mining (TSX:HUT), the first blockchain company approved to trade on the Toronto Stock Exchange reported solid revenue growth over the quarter, despite lagging bitcoin prices. Hut 8 boosted its profit margin from 51 percent to 58 percent compared to the same time last year, and reported revenues of C$26.7 million for the quarter, a leap from C$17.6 million in Q3 2018.
As quoted in the press release:
Utilizing its cash and bitcoin reserves, Hut 8 strengthened its balance sheet by repaying US$2.0 million of its debt to Galaxy Digital Lending in September 2019 and US$2.3 million of its debt to Bitfury for the nine months ended September 30, 2019, including US$750k paid in Q3-2019. In addition, Hut 8 reduced its accounts payable outstanding by over $6.0 million since June 30, 2019. This has led to the increase of Hut 8’s working capital surplus to $5.4 million as at September 30, 2019, which does not include non-current digital assets of $28.6 million. This was a drastic improvement from the working capital deficit as at December 31, 2018 of $18.3 million, which did not include non-current digital assets of $15.4 million.
The fair value loss for Q3-2019 on the revaluation of digital assets of $10.0 million represented the adjustment of value of the digital assets held in inventory to the market value on the reporting date as the price of bitcoin decreased from US$10,817 at the end of Q2-2019 to US$8,293 at the end of Q3-2019. Despite this, the Company recognized a revaluation gain on the fair value of digital assets of $8.2 million, for the nine months ended September 30, 2019.